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Report No. 61

Chapter 1C

Sale of Controlled Commodities

1C.1. Sale of controlled commodities.-

So far, we have dealt with transactions where the fact that property does not pass immediately in the goods, or does not pass in specie, raises legal difficulties in the way of the transactions being regarded as "sale or purchase of goods" within the meaning of the constitutional power of the States to levy a tax.1 We have now to deal with a class of transactions where such legal difficulty arises by reason of the absence of the consensual element required in a sale.

We refer to those transactions where, by law, the free choice of the parties-usually, the seller-is restricted in the matter of price, quantity of goods to be sold, party to whom they are to be sold or any other matter pertaining to the sale. Briefly, such sales may be referred to as sales of controlled commodities. Here, there is no question about the passing of the property in the goods. The property does pass to the buyer. But the absence of the consensual element-whose place is taken by a restriction imposed by or under a statute-creates controversies as to whether and in what cases the legal restrictions imposed by or under the statute destroy the character of "sale".

1. Constitution, Seventh Schedule, State List, entry 54.



Certain Problems connected with Powers of the States to Levy a Tax on the Sale of Goods and with the Central Sales Tax Act, 1956 Back




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